A great player in the apparel retailing industry is Burlington Stores Inc. (BURL, Financial).
This retailer has posted excellent quarterly results, including a 4% increase in net sales. Further, for fiscal 2015, Burlington’s net sales increased 6% to $5.10 billion.
Burlington is a leading off-price apparel and home product retailer. The company, through its wholly-owned subsidiaries, operates a national chain of off-price retail stores offering ladies’, men’s and children’s apparel and accessories, home goods, baby products and coats, principally under the name Burlington Stores. Burlington has a national footprint with 567 stores, including its online stores, in 45 states and Puerto Rico. Further, the company has a large assortment of current, high-quality, designer and name-brand merchandise at up to 65% off department store prices.
Mixed fourth quarter results
On March 3, the Florence, New Jersey-based company reported its financial results for the fourth quarter and fiscal year ended Jan. 30. The company’s net sales increased 4% to $1.54 billion, compared to $1.48 billion for the comparable prior-year period. Comparable store sales for the reported quarter increased 0.1%, which follows a comparable store sales increase of 6.7% in the fiscal 2014 fourth quarter. Burlington’s other revenue decreased 29.25% to $7.91 million, compared to $11.18 million in the year-ago quarter. But, the company’s total revenue increased 3.33% to $1.55 billion, compared to $1.5 billion in the same quarter previous year.
Adjusted EBITDA decreased 0.21% to $224.65 million, compared to $225.12 million in last year’s fourth quarter. Further, Burlington’s adjusted net income increased 0.30% to $109.26 million, compared to $108.93 million in the same period last year. The gross margin for the reported quarter declined by 120 basis points to 41% driven by increased shrink and markdown expense.
Burlington’s selling, general and administrative expenses decreased by 11.56% to $422.23 million.Â
Burlington ended the quarter with cash and cash equivalents of $20.91 million, and long term debt of $1.30 billion, a 4% increase from the year-ago quarter.
Fiscal 2015 results
For fiscal 2015, Burlington’s comparable store sales increased 2.1%, which follows a comparable store sales increase of 4.9% in fiscal 2014. The company’s gross margin increased 30 basis points to 40% from 39.7%. Further, a chart has been provided below to show the company’s different metrics for 2015 compared to 2014.
| Ă‚ | Fiscal 2015 | Fiscal 2014 | % change |
| Net sales | $5.1 billion | $4.81 billion | 60.3% |
| Other revenue | $30.91 million | $35.13 million | (12.01)% |
| Total revenue | $5.13 billion | $4.85 billion | 5.77% |
| Adjusted EBITDA | $484.03 million | $448.07 million | 8.02% |
| Adjusted net income | $174.55 million | $138.58 million | 25.96% |
| Selling, general and administrative expenses | $1.6 billion | $1.52 billion | 5.26% |
| Interest expense | $59.0 million | $83.74 million | (29.54)% |
Share repurchase
During the quarter, Burlington invested $77.4 million of cash to repurchase 1.6 million shares of its common stock, bringing the total investment in share repurchases to $200.4 million for 3.9 million shares repurchased during fiscal 2015. Further, the company had $199.6 million remaining on its share repurchase authorization at the end of the year.
Projections
For the first quarter of 2016, the company expects its net sales and comparable store sales to increase in the range of 6.2% to 7.2%, and 2.5% to 3.5%. Adjusted EPS are expected to be in the range of 44 cents to 48 cents, utilizing a fully diluted share count of approximately 72.9 million shares.
For fiscal 2016, Burlington expects its net sales and comparable store sales to increase in the range of 6.5% to 7.5% and 2.5 to 3.5%. Adjusted EPS are expected to be in the range of $2.62 to $2.72, and adjusted EBITDA margin expansion of 20 to 30 basis points. The company further expects to open 25 net new stores.
Strategies and growth
To provide better customer experience and store operations, Burlington has refined its off-price model through improved buying and inventory management, and has introduced several programs. To drive comparable sales growth, the company has increased its sales in underpenetrated areas including home, ladies apparel and beauty. It has utilized web-base survey to continue to improve overall customer satisfaction scores.
To expand operating margins and to drive EPS, Burlington has increased its purchasing power and is improving its inventory turnover. Further, the company is leveraging its expense base and is executing a share repurchase program.
From fiscal 2010 to fiscal 2015, Burlington’s net sales and EBITDA grew at a CAGR of approximately 7% and 9%. Further, from fiscal 2008 to fiscal 2015, the company’s comparable store inventory turnover improved 126%.
Management
On Dec. 22. 2015, Burlington announced the appointment of Mary Ann Tocio to its board of directors. Her strong leadership and operational experience will boost the company’s off-price operating model.
Source: Company website
On a concluding note
Overall, Burlington is a rock-solid company with a proven track record of performance with strong current business trends, flexible off-price sourcing and merchandising model, attractive store economics and significant whitespace for continued growth, and proven management and merchant team with extensive retail experience. With the recent quarterly release, the company is aiming for a better future and is expected to create greater shareholder returns.
Disclosure: I do not hold any position in the company.
